AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Models and expertise exist, but the passages do not establish barriers to replication or a durable causal advantage.
durability · — · Long-running profitability supports operating quality, but does not establish the persistence of a structural advantage.
customer dependency · — · Mortgage persistency demonstrates continuing coverage, but does not establish dependence on Arch specifically or meaningful switching costs.
erosion resilience · — · Profitable results coexist with realized pricing pressure; the resilience of an identifiable moat cannot be established.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Realized pricing pressure contributed to roughly 10% lower second-quarter reinsurance net written premiums. The decline also reflects cedant retentions and retrocessions, so it is not a pure rate measure.
retention · 2/4 · Mortgage persistency of 79.9% demonstrates recurring coverage, down from 81.9%. Loan repayment and cancellation conditions affect this measure; it does not establish group-wide loyalty or switching friction.
margin resilience · 3/4 · The 2025 combined ratio remained 82.8%, only 30 basis points above 2024, and first-half 2026 operating income increased despite competitive pressure. Second-quarter operating ROAE declined, and segment profitability is uneven. These results demonstrate resilience without proving pricing autonomy.
contractual freedom · 2/4 · Arch can reduce reinsurance participation when pricing is unattractive, but generally cannot cancel, re-underwrite or reprice existing mortgage policies at renewal. Freedom varies materially by business.
Predictability90
Financial-sector stability over five consecutive reported annual periods: equal weights for nondeclining revenue frequency, revenue-growth volatility (5–40pp), positive consolidated earnings frequency, and net-income/revenue margin volatility (3–20pp). Uses reported accounting scope; not industrial FCF or a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 14.26
- positiveEarningsShare
- 100.00
- netMarginStdDev
- 5.52
Financial strength56
Qualitative insurance assessment: equal-weight average of four current evidence-backed grades (0–4), scaled to 100. Policy financial-industry-1; not an industrial ratio score or credit rating.
capital adequacy · 2/4 · Arch Insurance (U.K.) and AMAL met disclosed Solvency II minimum and solvency capital requirements at year-end 2025. This supports compliance for those entities, but no coverage ratios, eligible-capital amounts or group-wide regulatory headroom are supplied. GAAP equity and catastrophe exposure ratios are not substitutes.
liquidity funding · 2/4 · Arch Re Bermuda disclosed approximately $4.5 billion of remaining 2026 dividend capacity without an affidavit, and actual note issuance demonstrates funding access. Distribution restrictions and missing consolidated liquidity, maturity and stressed-claims information limit the assessment.
asset liability risk · 2/4 · Prior-year loss development was favorable in 2023–2025, while early-2026 mortgage delinquencies increased modestly. Modeled peak-zone catastrophe loss was 8.0% of tangible shareholders' equity available to Arch, a modeled exposure measure rather than a solvency ratio. Investment valuation losses occurred; recoverability, credit quality and duration matching remain unestablished.
earnings resilience · 3/4 · Reported common earnings remained positive throughout the disclosed ten-year history, and first-half 2026 common earnings increased to $2.084 billion. Mortgage underwriting remained profitable despite reinsurance pricing pressure. Investment and tax effects influence GAAP earnings, and the record does not guarantee future catastrophe resilience.
Capital allocation56
Qualitative insurance assessment: equal-weight average of four current evidence-backed grades (0–4), scaled to 100. Policy financial-industry-1; not an industrial ratio score or credit rating.
capital efficiency · 3/4 · 2025 GAAP return on average common equity was 20.1%, with non-GAAP operating ROAE of 17.1%; first-half 2026 annualized returns were 17.9% and 15.4%. These are demonstrated common-equity returns, not regulatory-capital returns or proof of a moat.
distributions and buffers · 2/4 · Actual repurchases and dividends are supported by earnings and disclosed subsidiary dividend capacity. Returning approximately 94% of first-half net income leaves limited retained earnings before other equity movements, while group-wide solvency buffers are unavailable. The supplied evidence establishes neither imprudence nor exceptional buffer management.
dilution and cost · 2/4 · First-half diluted weighted-average shares fell from 380.8 million to 354.2 million, demonstrating net share-count reduction. Share-based compensation amortization remained $97 million, and substantial senior-note issuance accompanied capital returns. Missing financing terms prevent a stronger cost assessment.
investment discipline · 2/4 · Arch reduced participation where reinsurance pricing failed its return thresholds and declined renewal of certain acquired programs. Acquisition migration progressed, but transition costs continued and standalone acquisition returns cannot be established. This supports selective deployment with incomplete outcome evidence.
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Strong earnings and parent cash generation supported capital returns, but first-half repurchases consumed approximately 94% of net income alongside substantial note issuance. Repurchases above book value reduced book-value accretion; their economic attractiveness is unproven.
incentive alignment · 3/4 · Actual compensation arrangements emphasize equity and three-year tangible-book-value growth, with completed-period payout determinations and a TSR modifier. The disclosed 100% modifier despite below-median relative TSR limits the strength of the relative-performance linkage; ownership amounts are unavailable.
execution · 3/4 · Multi-year reported earnings and current returns demonstrate execution beyond management claims. Acquisition migration was substantially completed, although transition costs and acquired-program nonrenewals qualify the record. Financial results are indirect evidence of management effectiveness.
governance · 2/4 · Independent committees and executive sessions support oversight. The classified board limits annual shareholder accountability, producing a mixed assessment rather than exceptional governance.
Evidence
mortgage insurance business, in addition to utilizing reinsurance, we have developed a proprietary risk model that simulates the maximum probable loss resulting from a severe economic event impacting the housing market.
Risk management: proprietary mortgage risk model · Filed 26/02/2026
Other factors, such as our proven cycle management skills, our expertise in specialty lines of business and our use of technologies and data analytics are other factors, may differentiate us from our competitors.
Competition: asserted underwriting and analytics differentiation · Filed 26/02/2026
Year Ended December 31, (in millions) 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Net income available to Arch common shareholders (a) $4,359 $4,272 $4,403 $1,436 $2,093 $1,364 $1,595 $714 $567 $665 Net realized (gains) losses (464) (197) 165 663 (307) (815) (350) 301 (142) (47) Equity in net (income) of investment funds accounted for using the equity method (504) (580) (278) (115) (366) (147) (124) (46) (142) (48) Net foreign exchange losses (gains) 128 (75) 62 (102) (43) 81 11 (60) 114 (32) Transaction costs and other 75 81 6 — 1 10 14 12 22 42 Loss on redemption of preferred shares — — — — 15 — — 3 7 — Income tax expense (benefit) 106 41 (1,157) (42) 42 64 16 (15) 22 (2) After-tax operating income available to Arch common shareholders (b) $3,700 $3,542 $3,201 $1,840 $1,435 $557 $1,163 $909 $447 $577 Beginning common shareholders’ equity $19,990 $17,523 $12,080 $12,716 $12,326 $10,717 $8,660 $8,324 $7,481 $5,842 Ending common shareholders’ equity 23,376 19,990 17,523 12,080 12,716 12,326 10,717 8,660 8,324 7,481 Average common shareholders’ equity (c) $21,683 $18,757 $14,802 $12,398 $12,521 $11,522 $9,689 $8,492 $7,903 $6,114 Annualized net income return on average common equity (a)/(c) 20.1% 22.8% 29.7% 11.6% 16.7% 11.8% 16.5% 8.4% 7.2% 10.9% Annualized operating return on average common equity (b)/(c) 17.1% 18.9% 21.6% 14.8% 11.5% 4.8% 12.0% 10.7% 5.7% 9.4% B-2 | 2026 PROXY STATEMENT Tangible book value per common share represents common shareholders’ equity available to Arch less goodwill and intangible assets (excluding amounts attributable to non-controlling interests).
Annex B: historical earnings and returns on common equity · Filed 24/03/2026
Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net income available to Arch common shareholders $ 1,047 $ 1,227 $ 2,084 $ 1,791 Net realized (gains) losses (1) 17 (229) 104 (232) Equity in net (income) loss of investments accounted for using the equity method (196) (162) (356) (215) Net foreign exchange (gains) losses (10) 88 (31) 115 Transaction costs and other 32 18 50 28 Income tax expense (benefit) (2) 3 37 (57) 79 After-tax operating income available to Arch common shareholders $ 893 $ 979 $ 1,794 $ 1,566 Beginning common shareholders’ equity $ 23,358 $ 20,715 $ 23,376 $ 19,990 Ending common shareholders’ equity 23,200 22,211 23,200 22,211 Average common shareholders’ equity $ 23,279 $ 21,463 $ 23,288 $ 21,101 Annualized net income return on average common equity % 18.0 22.9 17.9 17.0 Annualized operating return on average common equity % 15.3 18.2 15.4 14.8 (1) Net realized gains or losses include, but are not limited to, realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries.
Results of operations: earnings and return reconciliation · Filed 04/08/2026
Net premiums written were $1.8 billion, down roughly 10% when compared to the 2025 second quarter, reflecting pricing pressures and higher retentions by cedants in certain property and short‑tail lines along with targeted increased retrocessions.
Current outlook: reinsurance pricing pressure and premium contraction · Filed 04/08/2026
As increased capacity has contributed to competitive conditions across portions of the reinsurance market, our underwriting teams are actively managing the cycle by selectively writing new business where returns are attractive and adjusting participation where pricing does not meet our minimum return thresholds.
Current outlook: increased capacity and selective underwriting · Filed 04/08/2026
Reserves for losses and loss adjustment expenses (“Loss Reserves”) represent estimates of what the insurer or reinsurer ultimately expects to pay on claims at a given time, based on the facts and circumstances then known, and it is probable that the ultimate liability may exceed or be less than such estimates.
Loss reserves: estimation uncertainty · Filed 26/02/2026
Mortgage. Mortgage guaranty insurance policies are contracts that are generally non-cancelable by the insurer, are renewable at a fixed price, and provide for payment of premiums on a monthly, annual or single basis.
Accounting policies: mortgage contract cancellation and fixed pricing · Filed 26/02/2026
Upon renewal, the Company is not able to re-underwrite or re-price its policies.
Accounting policies: mortgage renewal repricing restriction · Filed 26/02/2026
The persistency rate was 79.9% for the Arch MI U.S.
Mortgage segment: current persistency rate · Filed 04/08/2026
portfolio of primary mortgage insurance policies at June 30, 2026, compared to 81.9% at June 30, 2025.
Mortgage segment: persistency comparison · Filed 04/08/2026
The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12 month period that remains in force at the end of such period.
Mortgage segment: persistency definition · Filed 04/08/2026
A portion of premium payments may be refundable if the insured cancels coverage, which generally occurs when the loan is repaid, the loan amortizes to a sufficiently low amount to trigger a lender permitted or legally required cancellation, or the value of the property has increased sufficiently in accordance with the terms of the contract.
Accounting policies: mortgage cancellation circumstances · Filed 26/02/2026
Underwriting quality remained excellent with a consolidated combined ratio of 82.8% in 2025, a modest 30-basis point increase from 2024.
Compensation discussion: 2025 combined ratio and comparison · Filed 24/03/2026
Our insurance segment reported $27 million of underwriting income for the 2026 second quarter.
Current outlook: insurance underwriting income · Filed 04/08/2026
Our mortgage segment continued to deliver a steady level of earnings, generating $220 million of underwriting income in the 2026 second quarter.
Current outlook: mortgage underwriting income · Filed 04/08/2026
Equity incentives in the form of stock options, restricted shares and performance share awards account for approximately 68% of our CEO’s target compensation and 54% of target compensation in the case of our other NEOs.
Compensation discussion: equity share of target compensation · Filed 24/03/2026
Under the terms of the LTI Plan, the final number of shares ultimately earned by the eligible executives is a function of the absolute growth in the TBVPS of the Company’s common shares over a three-year performance period, supplemented by a TSR modifier.
Compensation discussion: actual performance award methodology · Filed 24/03/2026
At the end of 2025, the TBVPS grew to $61.71, a 33.65% annualized increase over the performance period, resulting in a payout percentage of 200%, based on TBVPS growth.
Compensation discussion: completed performance period and payout determination · Filed 24/03/2026
Based on Arch Capital’s TSR over the three‐year performance period of 56.3%, which placed it in the 38.9th percentile of our Performance Peer Group, the resulting TSR multiplier was 100.0%.
Compensation discussion: realized TSR and award modifier · Filed 24/03/2026
Papadopoulo and Vollaro, are independent as defined under the applicable listing standards of Nasdaq, and the Audit, Compensation and Human Capital and Nominating and Governance Committees of our Board are composed entirely of independent directors.
Governance: director and committee independence · Filed 24/03/2026
In addition to feedback provided during the course of Board meetings, the independent directors regularly meet in executive session without management present and have regular access to our management team.
Governance: independent executive sessions · Filed 24/03/2026
Board Structure Our Board has reviewed its classified board structure and continues to believe that this structure provides stability and continuity in the Board’s membership and in the direction it provides to the Company’s management.
Governance: classified board structure · Filed 24/03/2026
Arch Insurance (U.K.) and AMAL must maintain a margin of solvency at all times under the Solvency II Directive from the European Insurance and Occupational Pensions Authority.
Statutory information: entities subject to Solvency II · Filed 26/02/2026
The regulations stipulate that insurers are required to maintain the minimum capital requirement and solvency capital requirement at all times.
Statutory information: minimum and solvency capital requirements · Filed 26/02/2026
At December 31, 2025 and 2024, these requirements were met.
Statutory information: requirements met in 2025 and 2024 · Filed 26/02/2026
(“Arch Re Bermuda”), our Bermuda based reinsurer and insurer, which can pay approximately $4.5 billion to Arch Capital during the remainder of 2026 without providing an affidavit to the Bermuda Monetary Authority.
Liquidity: Arch Re Bermuda available dividend capacity · Filed 04/08/2026
Cash used for financing activities for the six months ended June 30, 2026 was higher than in the 2025 period and reflected the issuance of $2.0 billion of senior notes, partially offset by tender offer activity of $398 million.
Liquidity: senior note issuance and tender activity · Filed 04/08/2026
dollars in millions) Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K Affiliation with Registrant Deferred Acquisition Costs Reserves for Losses and Loss Adjustment Expenses Discount, if any, deducted in Column C Unearned Premiums Net Premiums Earned Net Investment Income Net Losses and Loss Adjustment Expenses Incurred Related to Amortization of Deferred Acquisition Costs Net Paid Losses and Loss Adjustment Expenses Net Premiums Written (a) Current Year (b) Prior Years Consolidated Subsidiaries 2025 $ 1,717 $ 33,547 $ 78 $ 10,100 $ 17,065 $ 1,625 $ 9,970 $ (600) $ 3,153 $ 7,025 $ 16,476 2024 1,734 29,369 68 10,218 15,100 1,495 8,849 (507) 2,651 5,073 15,732 2023 1,531 22,752 66 8,808 12,440 1,023 6,784 (538) 2,312 4,093 13,468 ITEM 16.
Schedule VI: incurred losses, prior-year development and paid claims · Filed 26/02/2026
The 2026 first quarter loss ratio reflected modestly higher level of delinquencies than in the 2025 first quarter.
Mortgage results: higher delinquencies · Filed 05/05/2026
ARCH CAPITAL 60 2026 SECOND QUARTER FORM 10-Q Table of Contents Based on in-force exposure estimated as of July 1, 2026, our modeled peak zone catastrophe exposure was a windstorm affecting the Florida Tri-County regions, with a net probable maximum pre-tax loss of $1.8 billion, or 8.0% of tangible shareholders’ equity available to Arch, followed by windstorms affecting the Northeastern U.S.
Catastrophe risk: modeled peak-zone exposure and tangible equity denominator · Filed 04/08/2026
dollars in millions) (Unaudited) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Non-cumulative preferred shares Balance at beginning and end of period $ 830 $ 830 $ 830 $ 830 Common shares Balance at beginning and end of period 1 1 1 1 Additional paid-in capital Balance at beginning of period 2,831 2,588 2,735 2,510 Amortization of share-based compensation 15 25 97 99 Other changes 27 47 41 51 Balance at end of period 2,873 2,660 2,873 2,660 Retained earnings Balance at beginning of period 28,082 23,250 27,045 22,686 Net income (loss) 1,057 1,237 2,104 1,811 Preferred share dividends (10) (10) (20) (20) Balance at end of period 29,129 24,477 29,129 24,477 Accumulated other comprehensive income (loss), net of deferred income tax Balance at beginning of period (333) (408) 5 (720) Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax: Balance at beginning of period (204) (221) 134 (507) Unrealized holding gains (losses) during period, net of reclassification adjustment (71) 296 (409) 582 Balance at end of period (275) 75 (275) 75 Foreign currency translation adjustments, net of deferred income tax: Balance at beginning of period (129) (187) (129) (213) Foreign currency translation adjustments (9) 64 (9) 90 Balance at end of period (138) (123) (138) (123) Balance at end of period (413) (48) (413) (48) Common shares held in treasury, at cost Balance at beginning of period (7,223) (4,716) (6,410) (4,487) Shares repurchased for treasury (1,167) (163) (1,980) (392) Balance at end of period (8,390) (4,879) (8,390) (4,879) Total shareholders’ equity $ 24,030 $ 23,041 $ 24,030 $ 23,041 See Notes to Consolidated Financial Statements ARCH CAPITAL 8 2026 SECOND QUARTER FORM 10-Q Table of Contents ARCH CAPITAL GROUP LTD.
Consolidated equity statement: compensation, repurchases and investment valuation changes · Filed 04/08/2026
4. Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Numerator: Net income (loss) available to Arch $ 1,057 $ 1,237 $ 2,104 $ 1,811 Preferred dividends (10) (10) (20) (20) Net income (loss) available to Arch common shareholders $ 1,047 $ 1,227 $ 2,084 $ 1,791 Denominator: Weighted average common shares and common share equivalents outstanding — basic 343.2 372.2 348.2 372.6 Effect of dilutive common share equivalents: Nonvested restricted shares 1.4 1.6 1.5 1.7 Stock options (1) 4.2 6.1 4.5 6.5 Weighted average common shares and common share equivalents outstanding — diluted 348.8 379.9 354.2 380.8 Earnings per common share: Basic $ 3.05 $ 3.30 $ 5.99 $ 4.81 Diluted $ 3.00 $ 3.23 $ 5.88 $ 4.70 (1) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive.
Earnings per share: weighted-average shares and dilution · Filed 04/08/2026
Through the first half of the year, we have repurchased approximately 94% of our net income in our own shares.
Current outlook: repurchases relative to first-half net income · Filed 04/08/2026
The 2.8% increase in book value per share for the 2026 second quarter primarily reflected strong underwriting and investment returns, partially offset by $1.2 billion of shares purchased at an average price higher than the book value per share.
Financial measures: book value growth and repurchases above book value · Filed 04/08/2026
These opportunities were partially offset by competitive rate pressure in select property and short‑tail lines, as well as our decision not to renew certain middle market commercial program business we acquired from Allianz in 2024 (the “MCE Acquisition”).
Insurance outlook: acquired program nonrenewals and pricing pressure · Filed 05/05/2026
We have substantially completed the data and system migration of the acquired businesses, positioning the platform to pursue scalable growth and enhance client and distribution experience.
Insurance outlook: acquired business migration progress · Filed 05/05/2026
Operating expenses were elevated this quarter as we incurred additional expenses related to the transition of the MCE Acquisition, with certain remaining transition expenses expected to extend into mid‑year.
Insurance outlook: acquisition transition expenses · Filed 05/05/2026
It is impracticable to provide historical supplemental pro forma financial information along with revenue and earnings subsequent to the acquisition due to a variety of factors, including access to historical information and the operations of acquirees being integrated within the Company shortly after closing and not operating as discrete operations within the Company’s organizational structure.
Acquisitions: unavailable standalone and pro forma performance · Filed 04/08/2026
dollars in millions) Statement of Cash Flows (Parent Company Only) Year Ended December 31, 2025 2024 2023 Operating Activities: Net Cash Provided By Operating Activities $ 1,873 $ 2,398 $ 46 Investing Activities: Net (purchases) sales of short-term investments 3 (26) (8) Acquisitions, net of cash — (450) — Other 10 5 1 Net Cash Used For Investing Activities 13 (471) (7) Financing Activities: Purchases of common shares under share repurchase program (1,889) (24) — Proceeds from common shares issued, net 50 7 (2) Common dividends paid (7) (1,866) — Preferred dividends paid (40) (40) (40) Net Cash Used For Financing Activities (1,886) (1,923) (42) Increase (decrease) in cash and restricted cash — 4 (3) Cash and restricted cash, beginning of year 13 9 12 Cash and restricted cash, end of period $ 13 $ 13 $ 9 The financial information for the parent company (Arch Capital Group Ltd.) should be read in conjunction with the Consolidated Financial Statements and Notes thereto.
Parent-only cash flows: distributions, acquisitions and financing · Filed 26/02/2026
However, the ability of our regulated insurance and reinsurance subsidiaries to pay dividends or make distributions or other payments to us is limited by the applicable local laws and relevant regulations of the various countries and states in which we operate.
Liquidity: regulatory limitations on subsidiary distributions · Filed 26/02/2026
